Two Triangle area banks got a significant slice of that 'TARP' - or Troubled Assets Relief Program - money. Cary's Crescent State Bank received nearly $25 million, and Raleigh's Capital Bank received nearly $43 million.
They both say they're using the cash responsibly.
In the rush last fall to fight the credit crisis, the government did not set many rules for TARP money. But Capital Bank says it is helping the construction industry by lending to all kinds of borrowers, even if some of the TARP home loans look surprisingly large.
Inside Raleigh's beltline, a builder is offering special discounted interest rates for those who need to borrow over $417,000 to buy a home. Most lenders offer so-called jumbo loans at 7 to 8 percent interest, but with $43 million in TARP money, Capital Bank is writing big loans for 5.5 percent.
"If you can knock 2 percent off of a mortgage rate, it's an enormous deal to a buyer," said Mark Jones with Red Wolf Homes.
Taxpayer money going to subsidize million dollar home loans was not the image painted by Congress when it passed the $700 billion TARP last fall.
"Sounds like there's a niche that needs it," said Peter Skillern with the Community Reinvestment Association. "But overall, how is the bank serving the entire community? And are the TARP funds helping them to do it in a better fashion?"
Skillern says high-dollar home loans are okay if banks also use public money to help low-income buyers as well. But the government initially set very few rules for TARP money.
"Our local banks are healthy," Skillern said. "They've received TARP funding, without any real direction about how it has to be used."
Officials at Capital Bank say they will use TARP money for a range of commercial and home loans, and the builder thinks many will benefit.
"It has the perception, because it's a million dollar home, that it's only helping wealthy people," Jones said. "But I can tell you wealthy people did not build the house."
And Capital Bank officials stress the TARP money is not a gift. They say they are lending it out only in North Carolina and plan to pay the American taxpayer back with 5 percent interest.
Crescent State Bank of Cary declined to comment on its plan for the $25 million it got in TARP money.
